Investments in Portfolios and Planning for Retirement:

Portfolios and Investment Management is a very interesting and important subject of the Financial Management. The subject circles those areas of our financial management skills which deal with investment and derivatives management. That is a important subject to become a MBA-Finance degree holder. The investment in Portfolios and in diversified stock helps an individual to make the better and efficient plan for his retirement.

Retirement is a point where a person stops to work or quit form his employment. Because with the passage of the time our biological need are going day by day increasing and our bodies need proper care so that’s the reason mostly people quit at this stage in their life but some of them reduce their working hours.

That time is the very crucial time of the life where you are going to pay back many things to your own self and to your belonging also. The word belonging here used especially due to this time horizon because at this stage every person need special assistance form Partner, Family, Friends and Society. So the belonging can be the people who attached with you and to whom you served in past.

That is a very interesting topic to discussion because due to its importance the main reason is time and every person need to plan about his retirement but the real question is when he or she start this planning. It’s up to the individual when his or her mind accepts the retirement concept.

There are many methodologies we use in the retirement planning process but the professionals like Scott Hanson and Pat Mc Clain  planning the principals at Harson Mc Clain Advisors spent 20 years efforts and time to create the Chaotic process for this time period. The whole plane is consist over 7 different points. These 7 Steps helps the individuals to make an effective and economical plane for post work life.

The key 7 Steps of this planning process are explained blew:

Income You Need:

                The Income you need according to your expenses in those days. That need a perfect  analysis to make a visual picture for you to understand the future life and make your investment according to your needs . Formula to access income you need is as follows:                                                                                  Assets:                                                                                                                                                                           Fixed Assets.                                              xxxx.xx                                                         Add            Current Assets:                                           xxxxx.xx                                                        Total Assets:                                                              xxxxxxx.xx                                                                          Liabilities:                                                                                                                                                                   Monthly Expenses:                                     xxxxx.xx                                                   Add        Taxes & Insurance Payable                            xxxxx.xx                                                           Total Liabilities:                                                          xxxxxx.xx

Your Actual Next Worth:              Total Assets        -              Total Liabilities

Add all the assets and add also all the liabilities you have or you projected at this stage of life. The Subtract the Assets you have form your Liabilities. That’s give you a picture and clear view how much you have? How much you can spent?

Expenses and Debt Management:

                To enjoy and live better in your retirement life every person needs to control his expenses and manage his debts. It is better to focus on the other sources of income instead of you 9 to 5 job or make a wise decision and invest the cash in hand or the capital you have in some business and or in Financial Capital market to increase your monthly earnings.

         You need a perfect correlation between your income and expenses and expenses and your debts.

Tax Planning:

                The Tax planning is the very important planning in personal finance and investment management. You need to make a planned schedule to save the tax money but to pay the taxes within the correct time periods. During the planning of Taxation a person needs to keep the following points in his/ her mind.

a.       What is your documented and non-documented income?

b.      What are the resources of your income?             

c.       How much your business or investment payback you quarterly, semi annually and annually?

d.      How much you can save from your effective taxation skills and abilities?

e.      How much you know about the government strategies inside your country?

f.        You much need to review and follow the government directions and the annual budget documents?

g.       Always use a tax consultant and perfect legal attorney for your tax filling if you can afford their services.

Investment Decision:

                You’re financing skills and abilities keep you alive in the age of retirement they can motivate you towards the risk taking decision. But there are many things to do before make a investment decision which are very necessary for you. Like these points:

a.       You must know about your capital and your investment market.

b.      What are your aims and what are your objectives?

c.       What personality type you are, you a risk lover or risk avoider?

d.      How much you experienced about investment in financial market?

e.      What kind of Funds for investment you decide?

f.        In which market or business you want to make the investment and what is the payback percentage of your investment?

g.       Your investment is important for you, but you must have the knowledge that how much is your expenses at the age of retirement?

h.      How much your liabilities can cover form your investment?

Risk Management Psychology:

                There are three main points in risk management or have a very good risk management psychology these points have a key role in your decision making skills for your investment planning. These are the risk tolerance, the time horizon for investment and the diversification of your investment in portfolios. Risk Management is a skill which leads a person to make the decision control the business issues which come from internal and external environment. Every business man has a psychology to cover and deals with risk. The risk management is a skill and ability which come with the experience of business and investment.  For Risk Management Psychology every person have different mode for achieving his objective regarding his investment.

That’s the reason for risk management the short formula is as follows:

a)      How much you know about your business?

b)      How much you have the data and information about the investment market?

c)       What is your plane and how you can fit it in your investment decision? 

d)      What kind of abilities you have to work on your investment plan?

e)      What kind of Options you have to manage your investment decision?

f)       If you’re Plan A is fail so what is your next plan like your investment Plan B and Plan C?

These are the main point which helps a person to make his investment at low risk. This point also helps a person to make the final decisions about his investment according to his retirement plan.

Your Final Will:

                Every Person has a family his social circle and a professional legacy.  At the end of his service or professional tenure he is liable to transfer that will or legacy to his companions, partners and to his family person. That’s the reason you need an consultant or an attorney for that purpose. But some people who have a very big and strong social circle they have not need to hire a consultant or attorney for that purpose. Their friends and partners cooperate with them to make their retirement very admirable.

These 7 points helps every person to make a very desirable retirement plan and helps them to achieve their dream life at the age of their retirement.